Newspaper vs. Online Advertising – Is There a Niche for Newspapers in Modern Advertising Markets?

25 Pages Posted: 24 Oct 2011

See all articles by Nadine Lindstädt

Nadine Lindstädt

Pforzheim University

Oliver Budzinski

Ilmenau University of Technology

Date Written: October 24, 2011

Abstract

Newspapers have been experiencing declining circulation figures and advertising revenues for several years. Declining advertising figures, in particular, pose a threat to newspapers – this is especially severe in the U.S. where 73% of newspapers' revenues are generated through advertising. Many companies have expanded their advertising expenditures to online. Consequently, there are concerns about online advertising substituting newspaper advertising – much the same as has long been feared with regard to readership. Both possible effects might pose a threat to the continuing existence of (print) newspapers. However, though the internet – compared to newspapers – offers a variety of advantages for advertising companies, substitution tendencies cannot be generalized. In particular, we argue that newspaper advertising offers great benefits for the retailing industry. Thus, we believe that retail advertising offers a niche for regional and local newspapers that can be expected to represent a sustainable segment of complementarity within the otherwise predominantly substitutional advertising markets. The paper substantiates this argument by applying the economic theory of advertising – specifically the differentiation between persuasive/complementary and informative advertising. The latter presents the reason for retailers to continue advertising in newspapers. We conclude that no complete substitution between newspaper and online advertising can be expected to take place in the foreseeable future.

Keywords: media economics, advertising, competition, complementation, substitution, online

JEL Classification: L82, A20, L13, M21

Suggested Citation

Lindstädt, Nadine and Budzinski, Oliver, Newspaper vs. Online Advertising – Is There a Niche for Newspapers in Modern Advertising Markets? (October 24, 2011). Available at SSRN: https://ssrn.com/abstract=1948487 or http://dx.doi.org/10.2139/ssrn.1948487

Nadine Lindstädt (Contact Author)

Pforzheim University ( email )

Tiefenbronner Str. 65
75175 Pforzheim
Germany

Oliver Budzinski

Ilmenau University of Technology ( email )

Ilmenau, D-98684
Germany

HOME PAGE: http://www.tu-ilmenau.de/wth

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